A Sovereign Speculator

"Giving money and power to government is like giving whiskey and car keys to teenage boys." - P.J. O'Rourke

Here we look for big waves. - Risk, variance, cycles, and randomness are just some of the phenomena we will explore. - Join us as we contemplate, rave and rant, shout, and catch big air.

Thursday, April 27, 2006

Investing For The Short Run

As John Maynard Keynes (1883-1946) said - "In the long run we're all dead."

Of course Keynes said that as a response to the reasonable assertion that economists of his type focus on the short term effects of their manipulation and ignore the potentially disastrous long term effects.

Keynesian economics has had a long run, if there are disastrous effects we should be feeling them now.

Keynes in a nutshell suggested that government had the key to economic stability -- in manipulation. In good times government could do little - in bad times they could prime the pump with spending.

Politicos of all types loved his theories - especially the spending part.

The trouble was doing little in good times - spending has always increased instead. To those that believed a lie about declining spending - take a look at the Official Treasury history of debt - it just keeps going up. By playing Enron type games with the balance sheets political types claim to balance the books - but the debt just keeps climbing - that is the reality.

In fact the government showed Enron how to do it.

I am particularly disappointed with a site I read frequently. They took down the debt page I refer to above and put on a private page that claims Clinton had a surplus. They wanted to support a political agenda rather than the truth. (they have changed back to a real page since this was posted. -ed)

The truth is that almost all government policies that have a short term beneficial effect have long term consequences that are not considered. The result is that government programs almost always have the opposite long term effect from that desired.

Central government planning killed the Soviet Union, the same socialist agenda is now choking America.

Today we are living at the end of the long run.

If you plan on investing for the long term - it is probably already too late.

Inflation, real inflation not government statistics, is probably around 10%. Unemployment, real unemployment not with cooked books, is probably over 10%.

The dollar is in trouble, the best of the economy is moving offshore, excessive regulation and high taxes have destroyed the internationally competitive stance of American business.

It is time to protect yourself and your own.

The return of your principle is now far more important than the return on your principle.

Tighten up your stop losses, research all your ventures again, think of the short term.

Friday, April 21, 2006

Of all 36 ways to get out of trouble, the best way is -- leave. - Chinese Proverb

I have recently had discussions with folks fed up with where they lived - and they were afraid.

I have quoted them one piece of wisdom - regardless of what country they lived in.

A country will always treat tourists better than citizens.

If you are increasingly uncomfortable as a citizen -- leave.

Keep your money or business in a safe and low tax country, keep your citizenship in a country that values freedom, keep yourself a PT -- perpetual tourist.

(As an example ; America and the UK are offshore tax havens to the world - except their own citizens.)If you live in a country that believes you are its property - just because you were born there - find some place that will let you own yourself.

From the Simon and Garfunkel song, 50 ways to leave your lover:

just slip out the back,Jackmake a new plan,Standon't need to be coy,Royjust listen to mehop on the bus,Gusdon't need to discuss muchjust drop off the key,Leeand get yourself free.

If you are staying for a few special benefits - count their true cost. Cattle feeding at a government trough must expect to be herded, penned, branded, milked, and/or slaughtered.

I can't help but believe a lean elk wandering free is more fulfilled than a calf being fattened in a stall.

Tuesday, April 11, 2006

How Deep Is Our Ignorance?

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I hang around with some financial quant types that love to talk about, what I regard as silly, mathematical formulas they are using to project markets. Most of the models assume so much that they are in fact dangerous - providing comfort where a reasonable fear of loss would be more appropriate.

If you talk with real scientists (rather than science professors) they are always seeking to narrow the error of their projections, but are very aware of the limitations of their efforts:

They may know what will happen with a fair degree of certainty and be able to explain the interaction - but the why and the how frequently escape them. The Nobel prize winner Dick Feynman even stated something to the effect that - why may not matter.

Real science is often a matter of educated trial and error - scientific method involves taking a guess, and then guessing how to disprove it.

If an experiment's results are outside the borders of expectation - there is a tendency for new tests to slowly converge results toward an acceptable solution.

Seldom is a proof sufficient to sway the established order, proof and counter proof are more the functional norm.

"An important scientific innovation rarely makes its way by gradually winning over and converting its opponents: What does happen is that the opponents gradually die out." - Max Planck, pioneer of quantum theory

This brings us to an interesting article on climate sensitivity. Check out James Empty Blog to read a current issue honestly and scientifically discussed.

Now to the why of my post, if it matters. I keep seeing references to scientific proof displayed with almost religious fervor. The user ignoring the methods employed in the test - the results are seized upon to confirm the hearer's bias.

I admit to the same fault - but more tongue in cheek. I collect studies that confirm my life preferences, studies in favor of meat, coffee, and an occasional glass of wine. I choose to ignore the equally scientific studies that expose the other view.Science is still in its infancy - we at best try to isolate and measure one or two parts of extremely complex systems - our results should be nice building blocks for real research in the distant future.

We may still be in the dark ages.

When someone quotes science or a scientific study to prove their point -- remember the American Food and Drug Administration (FDA). The FDA requires multi-billion dollar studies to prove the efficacy and safety of new drugs - and after a year or two has to recall some of those drugs as neither safe or effective.

"If people let government decide what foods they eat and what medicines they take, their bodies will soon be in as sorry a state as are the souls of those who live under tyranny." - Thomas Jefferson

If the study cost billions and has had years of research applied - it may be useful.

Monday, April 10, 2006

Why Political Consulting Is Better Than Business Consulting

I came to that realization after finding this fine poster at Despair Inc.

If you give bad advice to a business they go broke, and you have to start over.

If you give bad advice to a politician they just raise taxes and excuses and keep going.

Bureaucrats are like cockroaches, they are a bit less than real life, but they can survive almost anything. After a bit more than two thousand years Cicero still rings true:

"A bureaucrat is the most despicable of men, though he is needed as vultures are needed, but one hardly admires vultures whom bureaucrats so strangely resemble. I have yet to meet a bureaucrat who was not petty, dull, almost witless, crafty or stupid, an oppressor or a thief, a holder of little authority in which he delights, as a boy delights in possessing a vicious dog. Who can trust such creatures?" - Cicero

You can probably make a good living just telling the DMV to change the color of its buildings every couple of years.

As an example of the coming opportunities in government consulting:

National health care will be like combining the cost efficiency of the post office with the organizational efficiency of the DMV. Of course it will be administered with the love and affection of the Marines and the assured selflessness of congress.

Sunday, April 09, 2006

"Perhaps The Morning Will Bring Fresh Counsel"

I am refreshed this morning and recovered from the troll like honesty that inspired the prior post.

It is not their fault that they were never taught how to think for themselves.

It is kind of like the bachelor that proclaims proudly that he is not married just like his daddy and grand daddy - and he intends to raise his kids the same way. He has placed a barricade before one prospective avenue of life.

Folks that have minds like steel traps are quite common - but most minds are rusted shut before they reached the age of consent.

I need a rest from the pablum that is fed political followers. It is my responsibility to avoid their damp diaper blogs.

Thursday, April 06, 2006

America Redefined By Its Roots

There once was a very different America.

Initially here was debate on Federalism and its value. A phrase might have been: The united States of America are seeking unity on the mater of defense.

With the civil war the independence of state governments was vanquished. The freedoms enhanced by competing independent states have slowly vanished. Liberty has been squeezed by an ever stronger central government for the last 150 years or so. After the Civil War that American phrase would read: The United States Of America is focused on defense.

Notice the difference? What was a group of independent states united for self defense had become one central state to rule them all.

Today an American statement might even read: The President declares that a strong internationally proactive offense is being activated to ensure an adequate defense of the American Homeland.

That is a huge difference.

What then does it mean to be an *American, and can we even use the term without confusion?

I'll refer you to a nicely written post at two-four (the blog's title is taken from the Hanoi Hilton prisoner's tap communications code) where he uses an older definition of American to illuminate the current immigration debate.

The first American revolution was needed to dump strong central government and elevate personal liberty. Those that cling to personal political power today will consider any move to return freedoms a second revolution.

Saturday, April 01, 2006

Going Offshore With Your Assets

Bob Bauman is the editor of the excellent Sovereign Society Offshore A Letter.

You can subscribe for free.

As much as I dislike the word should, maybe it fits here. Let's just say instead that there is great benefit for intelligent people to be derived from reading the A Letter.

today's newsletter was a "back to basics" missive.

What is offshore?

Offshore is another jurisdiction that affords asset protection from frivolous law suits and sometimes provides lower taxes. Here is a quote from the most recent A Letter:

Just as some American states (Florida, New Hampshire, Alaska et al) offer their citizens an escape from other states' income taxes, offshore tax havens do the same for foreigners. These are tax breaks local citizens can only dream about, but the locals do profit from better jobs and higher incomes. (The two largest tax havens in the world are the USA and the UK -- but only for non-citizens who choose to invest there; locals pay taxes, lots of them).

As an example California residents frequently incorporate their companies in Nevada to avoid harsh taxes and regulations. Even selecting your new home based on the quality of the school district is a localized "offshore" approach.

Abe Lincoln mentioned America as a government "created of - by - and for the people." Many see that quote as only a historical observation. Over the last hundred and fifty years American government has increasingly treated citizens like cattle.

America started free and wanted to stay free.

"Where liberty dwells, there is my country." - Benjamin Franklin

America, and the western world, has traded their liberty for government programs. You can now see the cattle mooing in protest around the world because they don't receive government guarantees.

"Government is the great fiction through which everybody endeavors to live at the expense of everybody else." - Bastiat

Those that feed at a government trough must expect to be herded, penned, branded, milked, and/or slaughtered. I can't help but believe a lean elk wandering the mountains is more fulfilled than a calf being fattened in a stall.

Back to the A Letter.

A certain few nations and places have got it figured out. They have set up a legal system that makes them stand out as places that attract money -- truly desirable offshore financial centers. Detroit and Japan are known for making autos for the world, (at least Detroit used to be), offshore centers protect cash and make money for the world. They cater to foreign folks and foreign cash with laws that guarantee privacy, asset protection, ease of doing business and profitable investments -- with little or no local taxes. That international tax competition is great for those wise enough to take advantage of it.

That was just part of an interesting article.

I present an idea to you, one contrary to the years of conditioning you received in public schools. In feudal times when a knight pledged to his baron - the baron also pledged back to the knight - it was a mutually agreeable exchange of dedication, not a one sided deal.

If you are married - you are mutually pledged to your spouse. Make all your commitments on this basis. Do not be more dedicated to your baron, your job, your school, your country - than your baron, job, school, or country is dedicated to you.

It is not disloyal to move elsewhere, when where you are treats you like branded cattle.

The information may help you discover some personal liberty in a world that increasingly believes you are property.

"The risks and rewards for you from creative entrepreneurship are greater, and of far more value to society, than illusions of security that enslave a human cog in a social machine." - Allan R. Wallace